Investment banking involves a financial institution called an investment bank giving financial services which entail assisting their clients who may be individuals, governments or corporations in raising capital through underwriting or acting as their agent in issuance of securities. The investment bank may also help companies when it comes to mergers and acquisitions. They help the clients in providing ancillary services like market making, FICC services and trading of equity securities and derivatives. Investment banking is different from normal banking by commercial and retail banks as it does not entail taking deposits. Most G7 countries have not drawn a distinction between investment banking and banking done by commercial banks. In the US however, the Volcker rule in being part of the Dodd-Frank Act of 2010 clearly stipulates the distinction between the two.
Investment banking has two major lines of business. These lines of business are the sell side and buy side. The former involves trading of securities for other securities or for cash or for the promotion of securities. The buy side on the other hand, involves providing advice to different institutions which buy investment services. Some of the different types of the buy-side entities include mutual funds, unit trusts, life insurance companies, equity funds and hedge funds just to mention but a few. Investment banks can also be divided into public and private functions. In this scenario, there needs to be a Chinese wall to separate the two. This is because of the need to prevent any information from crossing over to either side. The private areas of the investment bank deal with private insider information which may not be disclosed publicly. The public areas on the other hand, such as stock analysis, are left to deal with public information.
One of the investment bankers who has made a name for himself is one Martin Lustgarten. He is originally from Venezuela and Austria but currently lives Florida in one of its most expensive oceanfront communities, Ponte Vedra. He is the CEO and President of Lustgarten, Martin. The company is one of the most recognised investment banks whose headquarters are in Florida. Martin has been able to utilise his investment banking skills to help individuals who have a difficulty in getting access in global trade. He has made a name for himself as a great investment banker with the ability to help investors close big financial offers and acquire capital from alternate sources.